TABLE OF CONTENT
Background of the Study
Statement of the Study
Purpose of the Study
Scope and Limitation of the Study
The Signification of The Study
Organization and Plan of The Study
Definitions of Terms
Review of Related Control
Definition of Internal Control
Objective of Internal Control System in Banking
Cause and Prevention of Banking Industry Failure
The Principle of Effective And Reliability of Internal
control Banking Industry
of Guarantee Trust Bank
Modification of The Research Question And Hypothesis
Sampling Design and Procedures
Pilot Study Validity and Reliability
Procedures For Processing And Analysis Collection
Administration of The Data Collection Schedule
Limitation of Methodology
Presentation and Analysis
Occupational Table Data
Sample “sex” Table Data
Sample “age” Table Data
Sample “ Department” Data
Sample “Level of Education” Table Data
Comparison of Statement Reflecting Whether Internal
Control Are In Place And How Can Them Be Improved.
Comparison of Statement Reflecting Weather
Effective And Reliable Internal control Can Help to Prevent Business failure.
OF THE STUDY
It is interesting to note those audits originated from the word audit
are: which means of hear in the olden days, a person who was appointed to
The accounts of the parties responsible for non financial transaction
is used to be called and hear the explanations needed by the person who held
the account come to be known as an auditor.
Originally, the objectives of an auditor was limited which include
trust to ascertain the fact, whether the accounting party has properly receive
the receipt and payment of cash on behalf of his principal which more cash
audit but the scope of audits today as been widered, it ascertain whether the
balance sheet and the profit and loss accounts exhibits a true and fair view of
the financial statement of the concerned. This has therefore become the most
important part of the auditors duties to the enlargement of size and complexity
of business enterprises.
Today, the concept and scope of auditing has changed a comprehension
definition of auditing given by Roberts E Schlessors and quoted by Jagdish
Drakash in his book: Auding; principle practice and problem (1990) says, Auding
is an examination of financial statements, records and related operation to
determine adherence to generally accepted accounting principle, management
policies or stated requirement.
In this definition, emphasis was laid on auditing being related to
operations and how far they adhere to management policies or stated requirement
in other words we find that was the need to introduce effective and reliable.
What then is this internal control? Internal is : the whole system of
control financial and otherwise established by the management in order to carry
on the business of the enterprise in an orderly and efficient manner ensuring
adherence to management policies safer fguarding the assets and securing as far
as possible the completeness and accuracy of records. The individual components
as known as control or internal control.
Millicham A.H (1990) in his institution manual for accounting students.
Also it was stated in paragraph 5 of the auditor operational standard requires,
that for an audit to place reliable on any internal control, he should
ascertain and evaluates those controls and perform compliance test on their
control. We therefore see that to have a sound reliable and effective control
system would be worth while for the organization and the possibility failure
would be mine.
1.2 THE STATEMENT OF THE STUDY
With reference to what was mentioned in the introduction that business failure
could result from ineffective and unreliable controls, this research work
therefore will look into ineffective and reliable controls system in the
banking industry today. This posses as a problem because it bring so many
associated problems which could be detrimental of working capital high debt
equally ratio decline, profit decline, high labour turn over, low capital
utilization, low quality services and finally fraud of which could be either
sales fraud, purchases Wages of pretty cash fraud.
1.3 PURPOSE OF THE STUDY
The purpose of the study is to contribute look at the problem at hand
(Business Failure) the associated problem it bring an interrelationship between
these variable and how one lead to the other or it’s effect etc and to provide
deterioration of working capital. The amount available for running of the days
to day business if there is uncontrolled wastage writing of to many debts e.g
high debt equity. The ratio of outside investor to the share holders is
important that a business is geared, bur when the gearing ratio becomes too
high, there could be problems of insufficient profit to pay dividend after the
deduction of increasing debenture. Interest interference of deduction holder in
the affairs of a company in respect of non payment. Irregularities invading the
use of deposit to obtain an illegal or unjust advantages, this could either be
cash or sales fraud, these types of fraud relate closely because before a cash
fraud may occur a sales must have occurred purchase fraud could be misuse of
order form, creation of non-existing supplies, presentation of two cheques for
signature with the same supporting documents.
WAGE FRAUDS:- This could occur by including
names on payrolls, leading ex-employees on the payroll or overcastting gross
and net columns in the wages sheet.
Wage fraud can be effective and reliable internal control help to
reduce business failure and other related problems.
1.4 SCOPE AND LIMITATION OF THE STUDY
Internal control system being a very large topic it could therefore be
said that it would be difficult to look at all department of internal control
in an organization as a result the researcher limits herself to accuracy and
authorization of operation with respect to cheques, cash receipts wages,
salaries, petty cash and measuring the reliability and effectiveness in the
Personal interviews and structured questionnaire will be employed
appropriately, also textbook journals, annual reports shall be consulted.
The limitation encountered were those and willingness of respondents to
answer important question.
1.5 THE SIGNIFICATION OF THE STUDY
Of the financial service sectors such as Banking, Building Society.
Consumer credit, purchase leasing, factoring business ventures etc. Bank
represent probably the most important sector this is not just in term of turn
over profit and employment of labour but also in it’s paramount impact on the
other sphere of the economy.
Any problem on the Banking System would in =variably have strong effect
on the economy and that is why this research work tries in study the internal
control on the Banking sector with respect to guarantee trust bank and see how
it’s effectiveness and reliably would be used to prevent business failures.
This work will serve as a basis of broadening the research knowledge on
internal control and it’s customers and investors, their would be confidence
control in place that can be relied upon for safe guarding their deposits.
Management on the other hand will be able to reduce losses and improve
on internal control system.
Finally, the academic world will use this work as a basis for further
1.6 ORGANIZATION AND PLAN OF THE STUDY
Plan of the study to this project is divided into five (5) chapters.
CHAPTER ONE: - Of this project focus on or
comprises the introduction background of the study, statement of the problem,
purpose of the study tentative research question definition of terms, scope and
limitation of the study also significant of study.
CHAPTER TWO: - laid emphasis on the literature
review that is what other author newspapers, magazine involved and also to
verify the interest figure.
Audit Evidence:- This
is obtained by carrying out audit test
Compliance Test:- These
are those tests which seek to provide Audit evidence that internal control
procedures are being applied as prescribed.
is the degree to which predetermined objectives of target is met.
ENQUIRY:- Seeking relevant information
from knowledgeable persons inside the enterprises whether formally or
Checking the arithmetical accuracy of the accounting records or seeking
AUDIT:- This is an independent appraised function within
an organization for the review of system and the quality of performance as a
services to the organization. It objective examines adequacy and internal
control as a contribution to the proper economic; efficient and effective use
CHECK:- This is an aspect of internal control which is
exclusively concerned with the prevention and early detection of errors, and
fraud, this involve the arrangement of book keeping and other clerical duties
in such a way as to ensure:-
That no single fraud is encountered from its
beginning to its conclusion by only one person.
That the work of each clerk engaged upon a task is
subject to an independent check in the source of another duty.
EVALUATION QUESTIONIAIRIES: - This is list of question
designed to get specific information about a particular item. Financial or
otherwise, with regard to internal control of an organization have said about
objective, course and prevention of banking industry and the principle of
effectiveness and reliable of the internal control in Banking industry.
CHAPTER THREE: - Detail with research methodology
historical background of the internal control research design study population,
sampling design, procedure, pilot study validity and reliability,
administration of data collection schedule, procedures for processing and
analyzing collection data and limitation of methodology.
CHAPTER FOUR:- Deals with presentation and
analysis respondent characteristics and classification occupational, sample
sex, age, departmental, level of education data, comparison of statement
reflecting whether internal control to prevent business features.
CHAPTER FIVE:- Which is the last chapter formed
the summary of the whole study, conclusion, recommendation and bibliography of
1.7 DEFINATION OF TERMS
AUDIT:- In modern sense, an adult is a
process (carried out by suitable qualified auditor) whereby the account of
business enterprises, including limited companies, charities, trust and
professional firms are subjected to scrutiny to form an opinion as to their
accuracy, truth and fairness. This opinion is imbedded in an “audit repot”
addressed to those interested parties who commissioned the audit, or to whom
the auditors are responsible undertake.
TEST: - Test carried in the process of auditing to
determine the trueness and failure of the transaction.
EVALUATION QUESTIONNAIRE:- This is list of questions designed for assessing
whether specific error are possible than with establishment whether certain
ORGANIZATION CHART:- This is pictorial
presentation of level of authority and such that no person is responsible for
the recording and processing of a complete transaction.
TESTS:- These are those tests of review which seek to
provide evidence as to the competence accuracy and validity of information in
the accounting records in the financial statements.